"Jackie is not right on everything ... obviously not everyone is going to agree with the Government on this - that's life.

"The job of government is not to make the easy decisions, the job of government is to make the tough decisions.

"The job of government is not to do what everyone wants. The job of government is to try and work out what everyone needs and do that."

Mr Abbott also refused to agree to mandate a curfew for Badgerys Creek, saying it would undermine the airport's future economic value if he made that decision now.

"I think it is far too early to be talking about curfews," he said.

"We need to use this airport in a way which maximises its economic value for western Sydney ... and if we start putting restrictions on it at this stage, we're undermining the economic asset that we want the people of western Sydney to have."

Barry O'Farrell was expected to attend this morning's announcement in Liverpool, but his decision to resign as Premier just 15 minutes prior overshadowed the announcement.

The Federal Government says New South Wales will preserve a rail corridor for an extension of the South West Rail Link to the airport.

The Commonwealth says it too will reserve a rail corridor and a station box at the airport site for "future use".

'No sense to build airport without rail'

Tourism and Transport Forum spokesman Ken Morrison says he welcomes the roads funding but finds it "hard to understand" why rail has been overlooked.

"It makes no sense to built a new airport in western Sydney which is not connected to Sydney's rail system," Mr Morrison said in a statement.

"Reserving the corridor and enabling work for the rail link is not enough, especially with no funding attached.

"The rail link needs to be an integral part of the airport construction process and should be completed and operational when the airport opens.

"Without a rail link, those people will be forced to drive to the airport adding to growing congestion in the area."